Stock Futures Rise as Earnings News Comes In Better Than Feared

By

Al Root

Jan. 25, 2019 8:07 a.m. ET

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Illustration by Michael Haddad

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Higher: Equities just might end a rocky week on a positive note Friday. Global markets rallied and U.S. stock futures have risen, but it isn't clear exactly what investors feel better about this morning. Thursday night,
Intel
(ticker: INTC) earnings disappointed and there is no news to speak of about trade or the government shutdown. Even with the bounce, the
S&P 500
will likely close lower for the week.
Dow Jones Industrial Average
and S&P 500 futures were up 0.7%, while
Nasdaq Composite
futures gained 1%. In today’s Morning Movers, we…

…dream about 5G wireless;

…wrap up earnings season way too soon;

…and wonder what’s eating at Deutsche Bank.

Barron’s Briefs

5G to the Rescue: The
PHLX Semiconductor Index
(SOX) jumped 5.7% Thursday. That was despite
Texas Instruments
(TXN) missing Wall Street’s revenue estimates for the fourth quarter. The good news: Texas Instruments said its communication-equipment business grew 20% year over year, benefiting from 5G deployment. Chip maker
Xilinx
(XLNX) also reported numbers, and its stock jumped 18%. Xilinx management made positive 5G comments, saying network buildouts in South Korea, as well as preparation for 5G deployment in China and the U.S., led its wireless business. Semiconductor test-equipment maker
Teradyne
(TER) joined the party as well, saying it was also seeing 5G growth. Teradyne stock closed 13% higher. Now, Intel may have thrown cold water on the 5G fire. After the close Thursday, Intel said 2019 revenues were likely to be $71.5 billion, well below the $73.1 billion Wall Street expected. Intel stock dropped nearly 6% in after-hours trading and Susquehanna downgraded the chip giant this morning.

Earnings Scorecard: About 30% of the S&P 500 companies have reported earnings so far. The results? OK. Overall, companies are beating Wall Street sales and earnings estimates at a pace similar to the one for third-quarter earnings reports. Growth has decelerated a bit. For instance, reported earnings grew 24% year over year in the third quarter of 2018, but so far, reported earnings growth in the fourth quarter is 13%. Still, the market is up 5% year to date. That’s likely because investors had expected much worse given the market’s 9.2% decline in December.

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